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In January of this year, the vast majority of Blizzard games disappeared from the Chinese market. This event was the result of a dispute between the American giant and NetEase, which distributed Activision Blizzard products in China.
The tumultuous break left thousands of dissatisfied Chinese players in its wake, as well as a whole host of questions about why. Reports recently published in New York Timesgive some suggestions and answers.
According to the NYT article, one of the more serious events that led to the final rupture of the partnership between the two companies was the October talks on further cooperation. According to eyewitness accounts, both sides had to leave the meeting with wildly different interpretations of what was said. As the text says:
[…] What NetEase executives saw as a conciliatory gesture Activision executives saw as a threat. A month later, the companies completely broke off negotiations.
The Chinese government’s growing interest in the video game market and the resulting regulations imposed on the private sector by the Chinese Communist Party must have been a tricky subject. The problem was not helped by the fact that the country’s governing bodies looked at companies associated with foreigners with growing suspicion.
NetEase asked the US giant to provide certain information and documents (such as annual income) that the Chinese company believes are necessary to prepare for new market realities. This request was denied by Activision Blizzard.
Adding fuel to the fire was the fact that NetEase was rumored to be trying to force a new deal on the publisher that would give the Chinese company a full publishing license. According to the Asian company, such a ploy would distract the CCP from a company that has close relations with foreign capital. Activision Blizzard again rejected the offer, considering the arguments given as pretexts in order to force the Chinese to make a better deal.
However, problems with new government regulations and verbal disagreements did not start friction between Activision Blizzard and NetEase.
Scandalous CEO Bobby Kotick has also proved to be problematic. His dissatisfaction was caused by an investment in which NetEase was to provide financial support to the Bungie studio. At the time, developer Destiny was not meeting the deadlines set by the contract with Activision. According to Kotik, financial support from the Chinese company should have subjected his company to additional delays and losses.
The situation was exacerbated during a conversation between the CEOs of the two companies about a potential acquisition of Activision Blizzard by Microsoft. According to NYT insiders:
[…]Kotick and William Ding, CEO of NetEase, discussed how a number of antitrust authorities around the world are considering Microsoft’s $70 billion purchase of Activision. […] At one point in the conversation, which was conducted through interpreters, Activision executives sensed that Mr. Ding was threatening Mr. Kotick. The Chinese government was reviewing the Microsoft acquisition, and Activision executives recalled that Ding assured NetEase could force the government to block or support the deal depending on the outcome of the licensing discussion. […].
NetEase representatives, however, denied that these statements were a threat to Activision Blizzard:
The idea was that if Activision didn’t get a licensing deal, Microsoft would face the same regulatory hurdles when it bought the company.
Despite the dramatic end to the years-long war between the two giants over Chinese gamers, in an official press release, Activision’s vice president noted a “very positive” experience in the Chinese market, adding:
While it’s true that the partnership took an unexpected and unsettling turn, it’s important to acknowledge that it was an anomaly – Michael Lee, VP of Activision Blizzard.
A NetEase spokesman only mentioned that the company has moved to a new level, adding briefly:
We invite Activision Blizzard to do the same.
The future plans of the American giant to solve the publishing problem in China remain a mystery. The partnership was estimated to have generated about $750 million in annual revenue.
According to industry websites, the recall of Blizzard games was felt by about 3 million Chinese gamers. Only in the case of World of Warcraft, it is about 100,000 people. Teams and esports leagues associated with Overwatch 2, for example, also faced a big challenge.
